TMI Blog2024 (2) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 933 - BOMBAY HIGH COURT] in Raj Ratan Palace CHS (supra), Revenue had preferred a Special Leave Petition in the Apex Court, which came to be dismissed on 28th October 2013 [ 2013 (10) TMI 1579 - SC ORDER] . This will take care of Questions 1 and 3 proposed in the appeal. Nature of receipt - Corpus fund taxability in the year of receipt - as submitted assessee is following mercantile system of accounting - CIT(A) held that on Rs. 3.50 Crores which was taxable under the head income from other sources only could be taxed for the year under consideration - ITAT after hearing the parties came to a conclusion that in view of the fact that assessee had not given possession of the land to the Developer during the year under consideration, the money received by assessee during the year was to be assessed under the head capital gains - HELD THAT:- We are unable to find any error in the conclusion arrived at by the ITAT. No substantial questions of law arise. - K. R. SHRIRAM DR. NEELA GOKHALE, JJ. For the Appellant-Revenue : Mr. Suresh Kumar, with Mr. Akhileshwar Sharma, Ms. Mamta Omle Ms. Dhanalaxmi Iyer. For the Respondents : r. P. J. Pardiwalla, with Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er agreed to pay an amount of Rs. 53.50 Lakhs to each member of assessee apart from Rs. 15 Crores to the corpus fund of assessee. The payment was in addition to the flats and parking spaces to be constructed and handed over to the members of assessee. 5. Assessee had not filed its return of income as required by provisions of Section 139(1) of the Act, i.e., by the due date of 30th September 2011 for the relevant Assessment Year ( AY ) being AY 2011-12. A notice under Section 148 of the Act was issued on 26th March 2013 to assessee and the Assessing Officer ( AO ) after following due process, completed the assessment under Section 143(3) read with Section 147 of the Act vide an order dated 27th March 2014 determining assessee s income at Rs. 103.58 Crores. 6. Aggrieved by this decision of the AO, assessee preferred an appeal before the Commissioner of Income Tax (Appeals) ( CIT(A) ). The CIT(A) partly allowed the appeal. Since the appeal was only partly allowed, assessee filed an appeal before the ITAT and to the extent it was allowed, the Revenue challenged it before the ITAT. The ITAT, as noted earlier, partly allowed the appeal of assessee and dismissed the appeal of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by the developer to the individual members of the society totalling in all about 51. The assessee filed its return of income wherein it did not offer any sum to tax in respect of agreement dated 18.5.1996. The Assessing Officer, however, was of the view that the assessee was the owner of the land and by virtue of clauses 12 13 of the agreement dated 18-3-1996 it was entitled to the entire compensation of Rs. 3,02,16,828/-, he was of the view that the assessee held a capital asset and allowed the developer namely 'N' to construct the multi-storied building on the surplus land belonging to the society and received compensation. The Assessing Officer held that the said receipt of compensation was taxable as per the provisions of section 2(24). He also held that the agreement between the developer and the individual 51 members of the society was only to facilitate payment by the developer and it did not absolve the society from the taxability of the entire proceeds. Thus, a sum of Rs. 3,02,16,828/- was added by the Assessing Officer. On appeal, the Commissioner (Appeals) upheld the addition made by the Assessing Officer. After considering the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case and in law, the Tribunal is right in holding that amount received cannot be taxed in the hands of assessee society because society continues to be owner of the land as no change in ownership of land has taken place without appreciation the fact that the assessee has received compensation of Rs. 3,02,16,828/-for granting the developer the right to develop the property which is clearly taxable as per provisions of Section 2(24) read with Section 2(47) and 2(14) of the Income Tax Act? The Hon'ble Court decided the issue as under : 2. The Revenue seeks to tax the society in respect of the amount received on transfer of TDR. The Tribunal in the impugned order recorded a finding of fact that the amount which was received on the transfer of TDR was received by members of Respondent Society. The members of the Society had offered the amounts received by them to tax in their individual returns. In fact, copies of orders of the Tribunal in respect of individual members who received amount from the developers and offered to tax was also placed before the Tribunal. 3. As the decision is based on a finding of fact which is not challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regards the 2nd question proposed, the issue was about taxing Rs. 3.50 Crores received by assessee towards corpus. The redevelopment agreement provided that the Developer would pay to assessee an amount of Rs. 15 Crores towards corpus fund out of which Rs. 3.50 Crores was paid on execution of the agreement and balance of Rs. 11.50 Crores was to be paid on expiry of 30 months from the possession date or on the date peaceful and vacant possession was given by the Developer to assessee. The AO held that the amount of Rs. 2.97 Crores that assessee had paid towards income tax was not an allowable expenditure because the amount of Rs. 15 Crores received towards corpus was nothing but a windfall. The AO held that it was just a receipt of a non-recurring nature and the same was to be assessed under the head income from other sources . He further added interest amount of Rs. 1.43 Crores. Assessee s case before the CIT(A) was that the entire amount of Rs. 15 Crores would not be treated as payment towards corpus of assessee because only Rs. 3.5 Crores out of the sum of Rs. 15 Crores was paid on execution of the Development Agreement and the balance was paid on expiry of 30 months on fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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